We should familiarize ourselves more with the blatant crimes Jim Cramer admitted to in the now infamous video brought to light by Jon Stewart. Cramer and his merry band of Hedge Fund thieves have learned how to illegally game the system of short selling and crippled countless businesses and their investors.
I will begin this thread with a video created by Bloomberg News called "Phantom Shares." It was also nominated for an Emmy for long-form investigative journalism. It's long, I know, (25 mins.) but well worth seeing to understand the compelling reasons why Wall Street is failing today. According to this report, there are billions of phony stocks floating around the stock market that have never been settled. It certainly gives new meaning to the term "toxic debt" that we hear so often now. I hope that shocks you enough to take the time to watch the video, and then meet me back here.
Phantom Shares (video)I did a video on another company called
Force Protection, Inc. and they were targeted by naked short sellers as well. It was inspired by information I learned from Patrick Byrne's website,
DeepCapture.com (If you don't know who Patrick Byrne is, you didn't watch the first video.)
You may recall early in the war, thousands of our troops in Iraq and Afghanistan were either being killed or badly injured by IED's while riding in Humvees provided by the military. Force Protection Inc. created a Humvee with a V-shaped hull that prevented virtually all injuries to IED attacks. As you can imagine, this company's innovative design was saving troops lives and providing a crucial weapon to deter the objective of those we're fighting...killing Americans with IED's. The company was planning to expand to meet military demands for more Humvees.
But then the naked short sellers hit them.
The Financial Terrorists of Wall Street (video)Remember Cramer mentioning in the infamous video how you "foment" a story about a company to manipulate their stock prices down? Well look who was "fomenting" at the same time the naked shorts were raiding Force Protection, Inc. (Hint: TheStreet.com is owned by Jim Cramer.)
Force Protection Hits Bump in Vehicle Contract Awards 7/05/07Force Protection's Wild Ride 10/12/07Downgrade Dents Force Protection 10/16/07Force Protection In Reverse 10/23/07Force Protection Fan Leaves Bull Herd 11/19/07The Scope of the Problem The reason company executives and short sellers debate the scope of naked short selling is partly because there aren't statistics that specifically measure such transactions. New York-based Depository Trust & Clearing Corp., which processes the vast majority of U.S. trading, does keep track of how much stock has been sold and not delivered on schedule to the purchasers. <strong>On an average day in March, those unsettled trades amounted to more than 750 million shares in almost 2,700 stocks,</strong> exchange-traded funds and other securities according to DTCC data obtained from the SEC through Freedom of Information Act requests.
Because there are innocuous reasons why stock may not get to the purchaser on time, such as paperwork delays, it's impossible to tell how many of those shares, known as failures to deliver, can be blamed on naked short sales, DTCC spokesman Stuart Goldstein says. "We're not in a position to know why trades fail," he says.
Games Short Sellers Play(pdf)
(DTCC oversees the digital transaction of every stock bought and sold. How could they NOT know which Hedge Funds are consistently naked short selling and failing to deliver the stock they supposedly borrowed?)
Our Captured Federal Regulator the SEC - The Cover-UpPatrick Byrne of Overstock.com and featured in the Bloomberg documentary, has made it his life mission to expose the criminal Hedge Fund gang that crippled his business and many others. He has a website called
DeepCapture.com and it is chocked full of information about the Hedge Funds involved, the media patsies, and the complicity of government regulators. He writes of the SEC:
For reasons that will eventually become clear, in early 2005 I began to believe that the SEC was behaving oddly, that is, in a manner inconsistent with its duties as a regulator. By the summer of 2005 I began publicly stating two hypotheses for this behavior. The first was that the SEC had been captured; I will explain the second in Deep Capture’s Chapter 7, “Unsettled Trades and Systemic Risk“.
Shortly after I started raising the possibility of the SEC’s capture, an SEC Senior Investigator named Gary Aguirre began echoing it, first in a September, 2005 letter to SEC Chairman Christopher Cox, and then in May 2006 in a second letter to the United States Senate. Mr. Aguirre has informed me that he wrote that first letter to Chairman Cox without knowledge of my own public statements, which preceded his by a month only.
The proximate cause of Aguirre’s complaint was that an insider trading investigation he had been conducting into the activities of Pequot Capital, a powerful Connecticut hedge fund, was derailed (he claimed) once the trail led towards John Mack, the influential boss of Morgan Stanley. Mr. Aguirre claimed that his SEC bosses had maneuvered to kill his investigation while warning Aguirre that Mr. Mack had too much “juice” to pursue.
The more general theme of Mr. Aguirre’s letter, however, was the capture of the SEC by lawbreakers to the detriment of law-followers. As former SEC Senior Investigator Aguirre wrote to the United States Senate:
“...is the SEC adequately protecting the nation’s capital markets and their participants from the risk of manipulation and fraud by the nation’s 11,500 hedge funds? The answer is no.
“And the answer is no whatever facts you consider. It is no when the SEC fails to recognize any hedge fund fraud or manipulation against other market participants for a quarter century: from 1979 to 2004. It is no when the SEC fails to protect mutual fund investors when billions of dollars are siphoned from their accounts by hedge funds. It is no when you compare what the SEC is doing and saying about hedge funds with what its counterparts in Europe are doing and saying....It is a deafening no when the SEC halts an insider trading investigation of one of the nation’s largest hedge funds because the suspected tipper has powerful political connections, as they did with the investigation assigned to me...
“I believe our capital markets face growing risk from lightly or unregulated hedge funds just as our markets did in the 1920s from unregulated pools of money – then called syndicates, trusts or pools. Those unregulated pools were instrumental in delivering the 1929 Crash.... There is growing evidence that today’s pools-hedge funds-have advanced and refined the practice of manipulating and cheating other market participants."
“Fixing the SEC so it can protect investors and capital markets from hedge fund abuse will not be an easy task. Powerful interests want the SEC to stay just the way it is or, better yet, to become even weaker. Those interests are not just the hedge funds. They include the financial industries that are receiving tens of billions of dollars in revenues for helping hedge funds cheat other market participants or close their eyes to the carnage. At the top of that list are the big investment banks, e.g., Goldman Sachs, Morgan Stanley, Merrill Lynch and Bear Stearns. Those interests know how to reward friends and punish perceived enemies. Their tentacles reach far. They stopped the hedge fund investigation I was assigned to conduct. They cost me my job.”
It would be difficult to devise a more eloquent statement of regulatory capture, or one more informed by experience, than this letter from SEC Senior-Investigator-turned-whistle-blower Gary Aguirre.
DeepCaptureIn January 2007, the Senate released a preliminary report of its investigation into Mr. Aguirre's charges:
“An official review raises serious questions about the Securities and Exchange Commission’s handling of an insider-trading investigation and the possibility of a cover-up amid allegations of political interference. <strong>After taking testimony and reviewing thousands of documents, many of them provided by the SEC, the judiciary panel’s preliminary findings show ‘extraordinarily lax enforcement by the SEC and may even indicate a cover-up by the SEC,’ </strong>
Specter said. The SEC’s handling of the matter, including a review of the attorney’s allegations by the agency’s inspector general, ‘has all of the earmarks of the obstruction of justice’, he said.”
DeepCaptureDo you still feel safe with your investments? Who is more of a threat to our way of life, Al Qaeda or these Hedge Fund managers? They have the consent of Congress, the SEC, and financial media outlets, and they have financially raped thousands of corporations and their investors, pumped billions of phony shares into our markets, and stifled the very essence of entrepreneurship in America. It's time for a serious change in how we do business and how we enforce our laws.
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